The Manufacturers Association of Nigeria (MAN) has expressed strong support for the recent tax incentive initiative, highlighting its potential to lower production costs and stimulate innovation within the sector.
During a webinar organised by MAN in collaboration with KPMG, themed: “Catalysing Growth in a Turbulent Economic Environment: The Role of Tax Incentives,” MAN’s director-general, Mr. Segun Ajayi-Kadir, praised the initiative. He emphasised that such incentives should be applied uniformly across the manufacturing sector and implemented with transparency and sustainability.
Ajayi-Kadir addressed the sector’s challenges, which are aggravated by ongoing foreign exchange volatility and high electricity tariffs. He criticised the numerous and elevated tax rates imposed by various levels of government and their agencies.
“Tax incentives are crucial in reducing production costs, driving investment, encouraging innovation, and fostering economic growth,” Ajayi-Kadir said. “They enable the government to incentivize businesses to invest in vital sectors, create jobs, and boost productivity.”
He urged the government to lessen the tax burden on businesses, particularly during economic uncertainty, to support manufacturers and other economic actors. Ajayi-Kadir also called on manufacturers to back the implementation of recommendations from the Presidential Committee on Fiscal Policy and Tax Reforms.
Ms. Elizabeth Olaghere from KPMG, Head of Tax, Regulatory, and People Services at KPMG West Africa, encouraged manufacturers to fully leverage the tax incentives and waivers offered by the Federal Government as part of its ease of doing business initiative. Olaghere advocated for policies that stimulate economic growth, particularly in the manufacturing sector, and emphasized the importance of strengthening the Pioneer Status Initiative (PSI), an income tax relief program in Nigeria.
She categorised tax incentives into profit-based and cost-based types, noting their significance in attracting new investments and expanding existing ones. Olaghere urged stakeholders to contribute feedback to enhance the PSI.
Deputy director of Tax Policy Advisory at the Federal Inland Revenue Service (FIRS), Mr. Matthew Osanekwu, highlighted the government’s efforts to ensure businesses access available incentives. He mentioned that manufacturers, including those in pharmaceuticals, baby products, veterinary medicine, agriculture, and gas, are already benefiting from various waivers and incentives.
Osanekwu pointed out that there are exemptions in some Value Added Tax areas, an export expansion grant, and a 35 per cent investment allowance for specific periods. The government is also working on executive orders and interventions to bolster the real sector’s contribution to economic growth through value addition.
Over the past year, the Nigerian manufacturing sector has faced increased production costs due to recent federal government reforms, leading to reduced profit margins and, in some cases, losses. In response, the government has approved tax reliefs, including the removal of withholding tax for farmers and manufacturers and the suspension of some import duties for the health and pharmaceutical sectors.
